Where is the market heading? In light of increased mortgage interest rates.

I received another email question today and thought I would post my long-winded answer below and share my thoughts with you too.

Enjoy! Mark

The question was:

Just wondering what is happening in the market after interest rates went
up.

Is there a lot of Townhomes on the market and are prices coming down.
Just wandering if is a good time to invest again.

Thanks

A.

Here's my answer:

Hi A.,

The market is quite fast these days. Normally, it slows down in the summer, but this summer has been quite active. Average prices are down a couple of percent which is typical for this time of year, but the volume of sales is hitting records. See the link below. Normally there are about 40-50 townhomes in Erin Mills for sale at any one time, but there are only 34 right now and many of them are conditionally sold.

Yes, this is a very good time to invest.

I realize the rates have increased but only marginally and it will likely only be short term. We are going short on all of our mortgages, time proves short term is by far the better option, see here, of course probably until I follow that method! :-))

There are not too many major scenarios that will cause real estate market to tank. One scenario is major global catastrophe or war or terrorist act. All could cause sudden and major drop in market, but the stock market would take a huge hit too. So would our entire economy, so all things being equal, anything major will affect everything, so real estate should still be a good long term investment. Time has proven real estate will recover and then some, so I am not worried, besides, it would just mean we get less rent, if we don't have to sell, all is fine, but more properties!

Another thing that could happen is that interest rates continue to climb. Once they reach 7 or 8 percent the economy will slow and then rates will stabilize and/or come down again. This may only last a year or two and then the economy will settle down again. Increasing rates certainly cut out the very bottom entry level buyers, but there seems to be enough buyers out there to sustain and continue to cause prices to rise and record sales month after month.

Another possibility is the US economy continues to be bad or gets worse. Although it used to be that "if the US got a sniffle Canada would get a cold or the flu", no longer seems to be the case. Our marketplace in the GTA, Ontario and Canada seems to have been insulated from events in the US since about 911 and seems to be able to sustain itself regardless of what happens to our friends south of the border.

Oil prices rise to $100 or more per barrel. Again, yes, this will have an impact on our marketplace, but maybe only short term. The demand for gasoline seems to be completely inelastic, regardless of how high gasoline and oil prices rise, we still drive large vehicles and conserve very little. We may complain like hell about the price at the pumps, but we pay it and keep driving.

US election years have almost always caused our market to slow, EXCEPT in 2004. Thus, it's your guess whether our market and economy slows next year or not.

Un-Employment rates rise, due to dollar, economy or overseas markets could cause our market to slow, people spend less money and the economy stalls, again, this would affect all markets, not just real estate.

Another scenario is that the baby boomers all get old in the next ten years and sell off their real estate and/or give it to their kids who cash out. Either way, if a flood of listings were to come on the market it could affect our prices in the short and long term. Personally, this does not worry me. There seems to be enough people out there to absorb any increase in inventory, but only time will tell on this one. I believe it will be much more gradual than people think. Fractional ownership worries me more than the boomers cashing out. I may be wrong on this and I've not researched the success or failure of fractional ownership in other parts of Canada or the world, but if time shares are any indication, I think that this may hurt more people than help them in the long run.

At any rate, these are some of the scenarios that the doomsayers are predicting and hopefully none of them will come to fruition and even if they do, I feel they will have less impact on our real estate market than some think.

There are other possible scenarios, I would like to hear your feelings and ideas, but these are some of the major reasons for large price swings in the market in the past and could be for the future too.

If history repeats itself again this fall, prices will likely escalate again in mid to late September until middle of November, see the graph here, so make your purchase soon or wait until December 10th to purchase and hope there are some listings on the market at that time that you like!

In summary, and I know it sounds corny, I still go by the old adage that the best time to buy real estate is yesterday.

Thanks,
Mark

For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

Canada’s Economy on Fire - From RBC

Canada’s economy on fire

The economic news from Canada during the past month has been unambiguously strong, with retail sales posting the largest one-month gain in almost 10 years in May and employers adding 35,000 more workers to their June payrolls.

Even manufacturers, who have to contend with the Canadian dollar trading at its highest level against the U.S. dollar in 30 years and rising input prices, remain optimistic. Statistics Canada’s quarterly survey of manufacturers, released in late July, reported continued optimism on production and employment with only a modest deterioration in the outlook for orders.

This upbeat assessment is likely to alleviate worries at the Bank of Canada that the currency has risen to levels inconsistent with economic fundamentals. The strong data reports support our forecast that the economy grew at an above-potential 3% annual rate in the second quarter and moved deeper into a state of excess demand.

In the July Monetary Policy Report Update, the Bank acknowledged that the economy “is operating further above its potential than was projected in the April report,” justifying their decision to raise the policy rate to 4.5% on July 10. Courtesy of RBC

Read more about real estate prices

For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

Canada’s economy still has solid momentum

Canada’s economy still has solid momentum
Canada’s economy enjoyed strong momentum going into the second quarter, but mixed
data for April and May resulted in a downward revision to the market’s forecast for the degree of monetary policy tightening in the pipeline.

The pace of job creation paused in April and May, although the unemployment rate held at its 33-year low and wage growth firmed, signalling that labour market conditions are tight. April’s headline numbers in the manufacturing, retail and wholesale reports were disappointing, although manufacturing and retail activity actually firmed in the month after adjusting for price changes; only wholesalers saw a big dip in sales.

Real GDP growth flattened out in April compared to the rapid gains in February and
March, but even with only a modest pick-up in May and June the economy is on track to grow at close to its potential rate in the second quarter. After the strong increase in the first quarter and with the economy already operating in a state of excess demand, a trend like increase in the second quarter spells no relief from the upward pressure being exerted on prices. This means that the Bank will have to raise the overnight rate if the mediumterm
inflation target is to be met.

See how the TREB Average Prices have escalated over the past 10 years



For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

Scottsdale Fine Properties located in Scottsdale Arizona

Scottsdale Fine Properties located in Scottsdale Arizona
Sponsored Post by Mark Argentino

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This site would compare quite nicely to this Mississauga site due to the fact that it appeals to the high end of the marketplace and the agents offer top level service to their clients.

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For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

TREB Real Estate Market Continues to set Fast Pace

August Report - More Records Broken
August 2, 2007 -- TREB Members reported 8,912 total sales in July, 26 percent ahead of the 7,082 sales recorded in July of 2006, and an all time record for the month.

Furthermore, July makes the fourth month in a row that sales have broken monthly records. "The local resale market is as healthy as it has ever been," said TREB President Donald Bentley. "Not only are we running 13 per cent ahead of last year's January - July total of 52,682, we are running 14 per cent ahead of the seven month total for 2005, which became our best year ever."

While sales have set a blistering pace, prices eased in July, down two per cent to $366,012 from June's average of $373,719. "This decline is seasonal in nature," said the President. "Prices tend to ease in July/August as potential homebuyers and sellers go on holiday." He went on to note that the year-to-date average, at $373,326, was up five per cent over the same time-frame in 2006.
See graphs of the average historic TREB prices

For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

Condo's continue to be very HOT in Canada

It's Still Condo Mania in Canada

Nearly half of all new home sales in Toronto in April were high-rise condominium suites, lofts and stacked townhouses. Across Canada, from 2001 to 2005, condo starts have posted an annual increase of more than 16 per cent, accounting for almost one-third of new home construction. Despite the amount of new product available, in most parts of the country, it's still a sellers' market.

A recent survey by Ipsos-Reid for TD Canada Trust, and a follow-up report by TD Economics, says both the short and long-term outlook for condos in Canada is good. It says Canada's healthy labour market, low interest rates and an aging population will contribute to brisk condo sales.

"The hottest markets, notably Calgary and Vancouver, will see some cooling off from dramatic and unsustainable highs last year, but overall conditions will remain healthy and activity will be high," says Craig Alexander, VP and deputy chief economist for TD Economics, and author of the study.

He predicts that during the next 18 months, the pace of condo starts will decline by about six per cent and resale prices will "cool out, while still remaining quite elevated." He expects Calgary will see price growth drop from 26.6 per cent last year, to 10.5 per cent in 2007/08. He forecasts Edmonton prices to drop from 16.6 per cent to 12.5 per cent, and Vancouver prices to go from a 16.3 per cent increase last year, to 10.5 per cent this year.

In the more stable central and eastern markets, Alexander calls for Toronto condo prices to increase by 4.2 per cent this year, while Ottawa price gains rise from 3.6 per cent last year to 4.5 per cent. Montreal price increases are expected to drop to 3.5 per cent from 6.4 per cent.

The survey found the top two reasons for preferring condos were lower maintenance costs and greater affordability. Alexander says that condo prices are almost half of the average price of detached bungalows in Vancouver, and roughly one-third less than the average price in Calgary and Toronto. "Given the rapid price increases in detached dwellings sustained over the last few years, condos may be the only option for some potential homeowners -- and many first-time buyers -- in selected markets," he says.

Other reasons for preferring condos are good building security, attractive design and environmentally friendly design/energy efficiency. Proximity to public transit, retail outlets and entertainment are also important factors for those looking for a condo.

The survey found that 39 per cent of Canadians would consider buying a new or resale condo, an increase of four per cent from a similar survey taken in June 2006.

"Looking beyond the near-term outlook, there is fundamental support for condos in the major Canadian markets from structural economic trends, including the aging population and the continued urbanization of the country," says Alexander in the report.

Older Canadians are attracted to condos as they downsize and look for less maintenance in their homes. The median age in Canada was 37 in 2001 and is expected to be between 45 and 50 by 2056. "This could create headwinds for real estate, which is influenced by demographic demand for housing, but the aging population could prove positive for condos," Alexander says.

While the demographic trend suggests slower population growth, Alexander says it is evident that cities will continue to grow faster than rural communities. In 1901, 37 per cent of Canadians lived in urban centres. By 1951 it was 62 per cent, and by 2006, 80 per cent of the population was living in an urban centre.

Rising traffic densities has led to urban renewal in the cities, which is expected to intensify in the years to come, Alexander says. "While condos are not solely located in cities, as evidenced by their presence in some resort settings, the bulk of condos are concentrated in urban centres, making them highly likely to benefit from the urbanization trend."

Despite the generally rosy outlook, Alexander says there are some risks for the condo market.

"The explosive price growth and the presence of speculation in the west have been sending off warning signals," he says. "But, if price growth moderates as new supply comes on the market and as eroding affordability dampens demand, a boom-bust cycle can be avoided.

"Meanwhile there is significant additional supply in the pipeline for Toronto from projects that are already underway, but are not yet completed. This could impact price growth, but so long as employment remains solid and interest rates do not rise significantly from current levels, there should be no problem absorbing the additional units," Alexander says.

Read more about Mississauga and GTA Condos



For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

Mortgage Rates to Remain Historically Low

Mortgage Rates to Remain Historically Low

A combination of a strong Canadian dollar vis-à-vis the U.S. dollar and modest GDP growth will help keep Canadian interest and mortgage rates low over the remainder of this year and in 2008. One, three and five-year posted mortgage rates are forecast to be in the 5.75 - 6.75, 6.00 - 7.00, and 6.25 - 7.25 per cent ranges respectively over the rest of this year and in 2008.

Mortgage rates have moved slightly higher so far this year and are expected to drift-up modestly in the first half of 2008. However, while mortgage rates won’t increase much, higher house prices will push mortgage carrying costs higher. This will ease housing demand, particularly for first-time buyers.

MLS price growth will remain strong in 2007 at 9.6 per cent, pushing the average price to nearly $303,500, reflecting continued price pressures in western Canada. In 2008, the average MLS price will reach about $318,400, an increase of 4.9 per cent.
Source: CMHC - www.cmhc.ca

Most buyers are first time home buyers

Most Intending to Buy a Home in 2007 are First-Time Home Buyers
According to CMHC’s newly released Renovation and Home Purchase Report - Major Market Highlights, a large share of intenders will be first time buyers.

Close to half (48 per cent) of purchase intenders will be first time buyers with the majority of first time buyers between the ages of 25 and 34, with a household income between $80,000 to just under $100,000.

How do home buyers intend to finance their future purchase? Over half of potential home buyers are planning to make a down payment of less than 25 per cent of the expected value of their purchase. The main sources of down payment funds are household savings for 37 per cent of potential home buyers, while equity from the present/previous residence is also a popular option with 27 per cent.

Housing Starts Decrease in June
The seasonally adjusted annual rate of housing starts was 225,500 units in June, down from 235,200 units in May. “Following a significant increase in May, the volatile multiple segment lost most of the ground it gained in June,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “Although housing starts will remain high in 2007, they are expected to resume a gradual decreasing trend. This is confirmed by the single detached component, which is slightly below the levels of the last two years.”
Want to read more about housing starts? Visit http://www.cmhc.ca/en/corp/nero/nere/2007/2007-07-10-0815.cfm

Read more about Mortgage Interest Rates




For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

Canada’s inflation reprieve likely to be short-lived

Canada’s inflation reprieve likely to be short-lived

Canada’s core inflation rate edged back down to 2.2% in May after hitting a four-year high of 2.5% in April. The monthly core rate increase of 0.3% was below the rapid 0.5% increase recorded last May, but faster than April’s 0.2% rise and almost double the average monthly pace in the core rate in the past two years, indicating that upward price pressures are not abating.

Even if the CPIX goes up by the average rate that it increased during the past seven Junes, the year-over-year core inflation rate would be 2.6% — the fastest pace of increase since March 2003 and reaching toward the 3% upper limit of the Bank of Canada’s 1% to 3% control target band.


Average Prices since 1985


For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

How to Increase Your Home's Value

How to Increase Your Home's Value

Like most people, your home is probably your single largest investment. While the value of your home is largely determined by such things as location, size, condition and amenities, there are still steps you can take to maximize its worth.

First, you need to evaluate your plans carefully if you're improving your home to put it on the market. Cutting corners could hurt rather than help your prospects, but you don't want to go overboard either. Your home's value should be no more than 20% above the average. That means a $10,000 kitchen improvement project might be a better idea than a $10,000 hot tub, especially if no other homes in your area have hot tubs.

In other words, it's best to keep changes simple.

Here's a list of remodeled projects that buyers are likely to find valuable:

Add a bedroom: Three- and four-bedroom homes are most desirable.

Install a master bathroom: When a bedroom has a bathroom, it means extra value.

Install a new shower: A new shower says a modern home.

Change your fixtures: Get a faucet that adds a decorative element to the bathroom.

Re-grout the tile: If the tiles are in good shape a new grouting does wonders.

Install new kitchen cabinets: Even just a paint job and some new handles will give your cabinets a fresh look.

Improve functionality: If you've got the space, an island is the way to go. New appliances make a difference too.

Expose the floors: Remove old carpet and show off the original floor. If you don't have hardwood floors, consider new carpeting.

Install new doors: Doors set off a room and make a great difference.

Paint the interior: A new paint job speaks volumes. Good colors to use are white, off-white, and a light yellow.

Add new light fixtures: Replace any that are damaged or out-of-style.

Add a fireplace: Even if you don't plan on using it much, it adds great value.

Take advantage of unused or underused space: If you can convert a basement or attic into a useful room, do it.

Landscape: A few strategically located plants and a neat-looking yard will impress.

Add a deck: It's a great use of exterior space because it increases your total entertainment area.

Dress up your porch and entrance: A freshly painted door with a new door handle can make a great first impression.

Replace the windows: New windows not only give your home a new look, they can also lower your energy bill.

Remember, when it comes to your home, it's important to keep pace with your neighbors. Don't let your home become the most expensive on the block - but don't fall behind either. This is a case where it's best to be right in the middle!

Quick Home Improvements
(Even You Can Do!)

Outside:

Sweep all walkways and sidewalks.
Remove newspapers, bikes and toys.
Park extra cars away from the property.
Trim back the shrubs.
Clean windows and window coverings.
Keep pet areas clean.
Make sure roof and gutters are in good condition.
Mow the lawn more frequently and plant flowers.

Inside:

Kitchen and bathroom should shine.
Put dishes away.
Clean and/or vacuum carpets and rugs.
Place fresh flowers in the main rooms.
Make beds and put all clothes away.
Open drapes and turn on lights for a brighter feel.
Straighten closets.


More Ideas and Suggestions



For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

Current Posted and discounted rates available in Ontario

Current mortage interest rates

TERM	POSTED	OUR RATES*
6 Month	6.65%	6.25%
1 Year	7.15%	5.6%
2 Year	7.3%	5.65%
3 Year	7.3%	5.7%
4 Year	7.3%	5.84%
5 Year	7.24%	5.79%
7 Year	7.55%	6%
10 Year	7.9%	6.15%
Variable Rate		3.05%
Prime Rate		6.25%

Browse to to see today's posted "Best Rates"





For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com